Saving, budgeting are more important now

Although the recent meltdown of our investment markets and economy has frightened most pre-retirees and retirees to the point of sleeplessness and panic attacks, there still seems to be resistance to organizing spending, saving and investing activities so they can sustain several years of bad economic news without a significant hit to their lifestyles.

Surveys in 2007 and 2009 conducted by Financial Advisor Magazine found more than half of those responding were already saving as much as they could, and 28 percent of pre-retirees planned to retire at the age of 65. About 20 percent planned to scale down their home or move to a less expensive area after retirement. About 75 percent had no plans to seek lifetime income guarantees from their investments.

The magazine reported that "Americans are still neglecting planning adequately for retirement," according to the Society of Actuaries. "The study found, for example, that inflation and healthcare costs are the two top concerns of pre-retirees and retirees, but neither group is aggressively addressing those concerns through proper financial planning."

Savings for Americans as a whole are up noticeably from pre-meltdown times when the annual savings rate was zero, but we may be slow to beef up our 401(k) savings and be realistic about what it will cost to live during retirement.

Perhaps the resistance to planning for future expenses does not seem urgent and important, but it may also be the "ostrich syndrome" — sticking our heads in the ground and not wanting to consider trouble until it actually knocks on our door. When we return to full employment and more people have decent incomes, the key planning strategies will be the same.

First, everyone should have a plan, even if it is a one-page document that deals with income needs after retirement. Don't forget to factor in inflation, so you are being realistic about future needs. Save more and spend less and, if possible, pay off your mortgage early.

After retirement, organize your investments so you can withstand the next bear market without decimating your equity investments. And last and most difficult, do what nearly everyone else avoids doing: create a budget and use it to exercise ongoing control over your spending, saving and charitable contributions.

Your actions can only match your most important goals when you have stated them clearly in writing and then pay attention each month to how your checkbook register matches what you wrote.